Indonesian authorities are searching for survivors after the sinking of an asylum seeker boat believed to be bound for Australia.

Up to 60 people are feared dead or missing after the sinking off the coast of Java. It was reported that the boat was full of Sri Lankan and Iranian asylum seekers.

The Australian Maritime Safety Authority confirmed that it was aware of the incident and the search and rescue operation was being led by Indonesian authorities.

A spokeswoman said AMSA had offered assistance but Indonesia had not taken it up.

The latest incident comes amid a torrid political debate over how to deal with asylum seekers arriving in Australia by boat.

Prime Minister Kevin Rudd's hardline new plan to send all arrivals to Papua New Guinea, in a bid to deter people from taking perilous boat journeys, has angered refugee advocates and human rights lawyers.

Opposition Leader Tony Abbott has questioned whether the plan will work if arrivals are not sent immediately to PNG.

More to come...